Transportation Industry: 'Ripe For Change'

Paul Pessutti

A recent S.M.A.C. Talk Technology Podcast looks at the urgencies facing the commercial transportation industry. Hosted by Brian Fanzo and Daniel Newman, the 12-minute audio interviews expert Paul Pessutti, global vice president and general manager of Travel, Transportation and Hospitality Industries at SAP. Pessutti, who spent 25 years with cargo logistics, discusses why the transportation industry is “ripe for change.”

Ocean shipping, rail, and trucking industry must embrace a generational shift

As Pessutti points out, the cargo industry faces disruption from today’s millennial-leaning transportation innovators. Think in terms of what modernized companies are bringing to the table. They offer tech-based transportation coupled with expanding services. For example, unlike many traditional trucking outfits, customers can click on electronic devices and enjoy real-time benefits.

“Companies that are able to not only provide the actual logistic services but value-added services on top of that to create an amazing customer experience,” Pessutti says . “That is what I think is what’s keeping a lot of shipping executives up at night, is not only how do they reduce their costs and maintain those expensive assets, but how do they innovate and provide a better experience to the customer.”

Many long-haul and regional transportation organizations have the competitive technology at their disposal. However, they tend to be hamstrung by an older workforce who are unsteady about embracing multi-level technology.

“I mean, that’s a big problem that we have in the industry, is that we have, in many cases, an aging workforce within these companies,” Pessutti says. “Whether it’s trucking, ocean shipping, the rail business, and they’re used to doing things a certain way. The whole concept of change management and doing things with technology can be a little bit scary for that group.”

Along with a workforce nearing retirement, the trucking industry also has a youth shortfall. Although artificial intelligence-functioning vehicles are on the drawing board, the trucking industry faces massive driver shortages in the United States.

Bob Costello, chief economist for the American Trucking Associations, concluded that the trucking industry could see its driver shortage grow to upwards of 174,000 by 2026 due to growth and attrition.

“This means that even as the shortage numbers fluctuate, it remains a serious concern for our industry, for the supply chain and for the economy at large,” Costello stated in an industry report.

SAP transportation expert Pessutti agrees with the chief economist’s conclusions.

“In addition, they’re having the challenge of attracting younger millennial talent that has the technology skills and know-how to be able to come in and help them innovate and make a change within their organization,” he says. “They’re having a hard time attracting the new talent because they’re not seen as innovators when it comes to technology. So, it’s something that we’re keeping our eye on and advising them to look at and find ways to take advantage of some of these new technologies.”

Bridging the gap between an aging workforce accustomed to traditional methods and engaging in millennial-styled outreach may be the pathway to resolving the growing workforce shortage. Costello concurs and has pointed to ideas such as lifestyle management and other industry modifications to attract a younger workforce.

Beyond making a shift that meets the ideas of tech-savvy drivers, the sector is tasked with maximizing its administrative and customer service technologies.

Blockchain innovation appears promising

When thinking about transportation in a comprehensive sense, it includes the movement of materials, manufacturing, air and sea travel, port arrivals, and warehousing. Trucking simply makes up one of the last legs of an intricate process. At each stage, stakeholders rely on traditional communication, cumbersome documents and sometimes just blind trust. The condition and timeliness of a product’s arrival are too often best guesses. Pessutti believes blockchain offers solutions.

“When you think about an indent shipment from the time an order gets placed to when it gets delivered to a customer, there’s probably 35 to 40 documents that you have to exchange in that process,” Pessutti says. “If we can get to a place where you’re able to look at those documents and actually get visibility and transparency into what’s happening as well as then trust that information, we’re going to do really well with blockchain in this industry.”

And, the SAP expert is far from alone in his assessment that blockchain can help revolutionize the transportation industry. Jillian Farrington argues in her article, “3 Ways Blockchain Technology Can Improve the Logistics Industry,” that it provides these key benefits: transparency, security, and cost-effectiveness. She makes these points.

  • Transparency: “Every time a product is handled, the transaction can be documented. The technology can enable everyone in the process of shipping to experience better visibility and connectivity.”
  • Security: “With blockchain, a copy of the essential shipping data can be stored on a decentralized network on individual nodes, so even if the network is hacked, the data remains safe.”
  • Increased efficiency and reduced costs: “The efficiencies created by this technology will get orders filled and delivered faster. It can record the transfer of raw materials and goods as they move through the supply chain as well as track purchase orders, shipment notifications, and receipts.”

Although blockchain can be a primary mover in terms of leveraging transportation industry data, the SAP expert recognizes the value of bringing a full complement of technological innovations to bear.

“I think what we’re able to do, and what we’ve proven out so far in this industry, is giving a lot of comfort to these shipping companies by connecting and integrating the digital core of what they’re running their business,” Pessutti says. “Whether it’s transportation management or an ERP environment, and then connecting them to these different capabilities around analytics and blockchain, (and) IOT.”

Transportation industry insiders appear to agree that the future of the sector faces a significant technological shift.

Take 12 minutes to get intellectually stimulated about the future of the transportation industry by listening to this S.M.A.C. Talk Technology Podcast featuring SAP expert Paul Pessutti.

Hear the full podcast episode here. Learn how to innovate at scale by incorporating individual innovations back to the core business to drive tangible business value by reading Accelerating Digital Transformation in Transportation.


Paul Pessutti

About Paul Pessutti

Paul Pessutti is Senior Vice President and General Manager of the Travel, Transportation, and Hospitality Industry Unit at SAP. Applying over 20 years of experience in this area, Paul is responsible for establishing and maintaining key customer relationships, ensuring customer success, enhancing the solution portfolio, growing the partner ecosystem, and acting as the brand ambassador worldwide. The industry consists of nine industry segments including airlines, airports, passenger transport, hospitality, travel service providers, freight forwarding and third parties, rail cargo, liner shipping, and trucking.